• Paul Clarke, Chief Growth Officer at Cashflows


• 01.10.2024 11:15 am
#EmbeddedPayments #CheckoutExperience

We have known for a long time that human beings have an innate appreciation of beauty – even infants as young as two months old will prefer to look at conventionally attractive faces. Beauty doesn’t have to be purely visual – something can sound, taste or feel beautiful, and even mathematicians will call equations ‘elegant’. What we don’t often, if ever, think of as beautiful is payment. Whether you’re handing over cash or paying online, payment is just something that needs to happen, like brushing your teeth. When businesses think about aesthetics of payments, they think in terms of speed and friction – ideally payments are as quick and invisible as possible. Put simply, they just work.

What if payments can be fast and frictionless, but also offer a white-glove experience in which the checkout facilitates whatever the customer needs, like the concierge at a high-end restaurant. Embedded finance is emerging as a key player in this shift, offering Small and Medium Businesses (SMBs) the tools they need to enhance transaction processes and engage customers more effectively. Recent innovations demonstrate how integrating financial products and services into companies' platforms can simplify checkouts while offering customers a range of flexible payment options.

SMBs’ growing appetite for embedded payments

Embedded payments are no longer a niche concept. Across the UK, and indeed Europe, SMBs are showing increasing interest in integrated financial solutions that can be embedded directly into their existing platforms. According to our recent research, conducted by Payment Systems Europe (PSE) and The Strawhecker Group (TSG), SMBs are becoming more receptive to embedded payment offers, with a significant portion of businesses expressing interest in these services.

The research reveals that approximately 70% of SMBs are interested in taking embedded payments in the future, with 35% of them receiving offers to embed payments. Moreover, the study indicates a strong future appetite for such services, with 82% of businesses likely to adopt embedded payments options in the near future. This growing interest is driven by the need for more streamlined payment processes, enhanced customer experiences, and the desire to keep pace with the broader digital transformation of commerce.

Why does it appeal to them?

For SMBs, the benefits go beyond mere convenience. It represents an opportunity to provide customers with a more integrated and seamless payment experience. By embedding payments directly into their platforms, businesses can offer a checkout process that is not only faster but also more aligned with the expectations of today’s digital consumers.

Consider the traditional online checkout process. Customers typically navigate through several steps—entering shipping details, choosing a payment method, confirming the purchase—before completing a transaction. However, embedded payments can simplify this process by integrating various payment options directly into the checkout flow. This allows customers to choose their preferred method of payment, whether it’s through a debit or credit card, digital wallet, or even a buy now, pay later (BNPL) option, without being redirected to third-party sites.

This level of integration is particularly valuable in enhancing the customer experience. The smoother and quicker the checkout process, the less likely customers are to abandon their carts. Furthermore, by offering financing options like BNPL directly at checkout, SMBs can potentially increase their average order value and conversion rates, making embedded finance a powerful tool for driving revenue growth.

Making the checkout process beautiful

One of the most compelling aspects of embedded payments is its potential to "make the checkout process beautiful." This goes beyond aesthetics—though that is a significant part of it. A beautifully designed checkout process is one that is intuitive and seamless. It’s a process that feels effortless for the customer and integrates smoothly into the overall user experience of the website or platform.

Technology has evolved and innovated to such an extent that today, embedded checkout systems are designed to give SMBs the ability to customise their payment processes to match the look and feel of their brand. This modern approach leverages technologies like JavaScript libraries, which allow businesses to create a tailored checkout experience with minimal development effort. The result is a checkout process that not only functions efficiently, but also enhances the brand’s identity and customer trust.

Moreover, the technology is built with flexibility in mind. SMBs can make updates and optimisations as often as needed, ensuring that their payment processes evolve alongside their business. With features like mobile responsiveness, businesses can also ensure that their checkout process is optimised for all channels, whether customers are shopping on a desktop, tablet, or smartphone.

Overcoming barriers to adoption

While the potential of embedded finance is clear, there are still barriers that SMBs must overcome to fully leverage this technology. One of the primary challenges is the lack of awareness and understanding of how embedded payments can be integrated into existing systems. Many SMBs may not be fully aware of the capabilities and benefits of embedded payments, or they may perceive it as too complex or costly to implement.

However, as technology providers continue to innovate and simplify the integration process, these barriers are rapidly diminishing. The availability of resources, such as developer support and testing platforms, is making it easier for SMBs to adopt these solutions. Additionally, the growing partner ecosystem of software providers that offer embedded payment options as part of their services is also helping to drive wider adoption. This is fuelling more of this technology to the businesses that need it, helping them evolve and grow and the communities they operate in, thrive.

Looking Ahead: The Future of Embedded Finance for SMBs

As the digital economy continues to expand, the role of embedded payments in shaping the future of SMBs cannot be overstated. 

With customer expectations evolving towards more seamless and flexible payment options, businesses that embrace the latest payment experiences will thrive in this new landscape. The ability to offer a "beautiful" checkout process—one that is simple, efficient, and integrated—will be a key differentiator for SMBs looking to enhance customer satisfaction, fuel repeat custom and drive overall growth.